Over the 1990s, Canadian businesses became more heavily dependent on financial markets as their primary source of external funding. Data display a trend towards a more market-oriented financial system. Our econometric tests suggest that this new trend started after the 1980 banking legislation amendments. The trend was considerably accentuated after the 1992 amendments. We provide a new series for the off-balance- sheet activities of Canadian banks that measures the non-interest income of banks as a credit equivalent. Despite the market-oriented trend, this series combined with our data reveal a healthy trend in banks activities: thanks to the amendments, financial institutions are simply closer to the markets. However, our data indicate that Canadian firms issue a substantial share of their bonds in the U.S. bon market. They also issue an increasing share of their stocks in the U.S. bond market. we conjecture that there is some form of incompleteness in the Canadian markets. A noticeable fraction of Canadian issuances in the U.S. involves riskier firms for which U.S. markets seem more mature.
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Publisher Info
Paper provided by EconWPA in its series Finance with number
0408002.
Length: 48 pages Date of creation: 12 Aug 2004 Date of revision: Handle: RePEc:wpa:wuwpfi:0408002
Note: Type of Document - pdf; pages: 48. 48 pages, pdf, edited with Latex - data available from christian.calmes@uqo.ca Contact details of provider: Web page: http://129.3.20.41
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